How To Make Money Investing In Stocks
It might seem like a volatile time to invest in the stock market right now, but with some knowledge, a person can learn how to make money investing in stocks. How?
- Look for bull markets that are performing well. Even during the past recession, for instance, there were sectors and industries that will did well. When the economy is healthy, industrials, tech and commodities are strong. When the economy is weak, consumer staples, drugs and gold are the stocks to buy.
- Buy "When others are fearful." You can make money investing in stocks by buying "when others are fearful" in the words of master investors Warren Buffett. This entails buying stocks that have been unfairly punished when they are cheap. For instance, when the economy is not healthy, it may be a good idea to buy quality stocks with a long-term story when they are cheap and hold onto them, selling a bit when the prices rise unusually in one day and buying more when they decline. This is a long-term, conservative way of investing in stocks, and it works well for many people.
- Do Your Homework. There are some who are worried about investing in stocks to make money and would prefer to buy a mutual fund so managers can make the essential decisions for them. However, investing in stocks requires nothing more than research, good judgement and patience, qualities that are not the specific province of fund managers. Visit a site like SeekingAlpha to do research on your stock. Look at earnings conference calls, analysis from well-known analysts as well as average Joe bloggers. You can make your own decisions for investing in stocks and make a significant amount of money just keeping your eyes open and reading more about a company.
- Stay diversified. An important tip to keep in mind when investing in stocks is to keep a diversified portfolio, which acts as a hedge during good times and bad. Every portfolio should have a a stock representing healthcare, energy, gold, tech, a foreign economy, and retail. It is also a good idea to speculate a little bit to keep things interesting. It isn't just investing in one stock that can make you money, but a variety of stocks can guide you to success.
Investing in stocks is not easy, but it is rewarding and you need not be an expert to make money at it. You should keep researching your holdings and keep track of where they are on a day to day basis. This doesn't require a huge outlay of time, but it is a commitment if you want to be successful investing in stocks.